Interview: Virgin Atlantic CEO on Loyalty and Low-Cost Competition

Future of Passenger Experience

To better understand the challenges facing airlines in an age of fluctuating oil prices, rapid growth, and changing passenger expectations, our Future of Passenger Experience series will allow leaders in the industry to explain their best practices and insights. 

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A little more than 30 years ago, a young, brash British entrepreneur named Richard Branson set out to create a fun, irreverent airline that would disrupt the established players — namely British Airways — and make air travel fun again.

By many metrics, he has succeeded. Virgin Atlantic is still around, and passengers tend to like it, awarding it relatively high marks for service and cabin innovation. In part because of Branson's tireless willingness to promote his companies, Virgin Atlantic has a respected brand — perhaps stronger than British Airways.

But a brand can only take an airline so far. Travelers might love to criticize British Airways, but it has two attributes Virgin Atlantic does not: a strong frequent flyer program and a route network that can take passengers nearly everywhere. If British Airways doesn't fly to a destination, its partners probably do.

For a long time — perhaps longer than was prudent — Virgin Atlantic hewed to its independent model. Even as British Airways received anti-trust immunity several years ago with American Airlines, Finnair and Iberia, allowing the airlines to share profits on transatlantic flights, Virgin Atlantic remained on its own, a niche airline focused on customer service.

In the end, it was an untenable position. And in early 2014, not long after Delta Air Lines bought 49 percent of Virgin Atlantic, a stake that had been held by Singapore Airlines, Virgin Atlantic entered into a joint venture with Delta. It was nowhere near the size of the British Airways transatlantic pact, but it gave Virgin Atlantic better scale to compete. For the first time, Virgin Atlantic could tap into another airline's customer base — Delta's flyers in the United States.

Now, Virgin Atlantic is going further. In July, it said it would join one of the biggest joint ventures across the Atlantic — a pact with Delta, Air France, and KLM. At the same time, Branson sold a major part of his formerly-controlling stake to Air France-KLM, with Virgin Group retaining 20 percent ownership. He remains the airline's chairman.

The new ownership mix and joint venture should improve Virgin Atlantic's ability to compete with Europe's largest airlines. But it will be interesting to see if the airline can retain its unique culture and ethos as its strategy changes.

We spoke last week with Virgin Atlantic CEO Craig Kreeger at the Aviation Festival